Several hundred students and youth who marched from Georgetown University to protest the Keystone XL Pipeline wait to be arrested outside the White House earlier this month. / Susan Walsh/AP

Written by

Brooks Jackson

FactCheck.org

After more than five years of claims and counter-claims about the proposed Keystone XL pipeline, President Obama is expected to make his final decision soon. So we thought it was a good time to sift through the disinformation and lay out some basic facts.

The pipeline would be built by TransCanada Corp. and would run 1,179 miles from Hardisty, Alberta, to Steele City, Neb., where it would connect with existing pipelines to refineries on the Gulf Coast. The U.S. segment would be 875 miles long, running through Montana, South Dakota and Nebraska. The 36-inch diameter line could carry up to 830,000 barrels (nearly 35 million gallons) of oil per day.

Because it would cross the U.S.-Canadian border, it would require a finding by the Obama administration that building it is in the national interest. The State Department, after lengthy review, submitted its Final Supplemental Environmental Impact Statement on Jan. 31, and said it would receive public comments until March 7. No date has been announced for a final decision.

The debate over the project has pitted environmentalists — who hope to block the project on grounds that it would worsen global warming and result in hazardous oil spills — against the president’s critics on the right — who say he should have approved it long ago to create jobs and lessen U.S. dependence on oil from less friendly countries.

Jobs

Any big construction project requires workers to build it. How many? The U.S. State Department’s analysis says 3,900 would be employed directly if the job is done in one year, or 1,950 per year if work is spread over two. TransCanada Corp. puts the number higher, saying the project would support 9,000 construction jobs directly.

There would be additional, “indirect” work for companies supplying goods and services, including concrete, fuel, surveying, welding materials and earth-moving equipment required for the project, and “induced” jobs resulting from money spent by workers and suppliers, such as ranchers providing beef for restaurants and construction camps. Counting up everything, the State Department estimates a total of 42,100 jobs could be created. TransCanada has accepted the 42,100 figure for total employment.

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Whatever the number, these jobs are temporary, lasting only for the year or two that it would take to complete the project. The number of permanent jobs is much lower. “The proposed Project would generate approximately 50 jobs during operations,” according to State’s analysis.

House Republicans are still claiming the project would create 120,000 jobs. But that’s based on outdated information. The House Energy Committee’s GOP majority website extrapolates from figures given by TransCanada two years ago — for a much longer pipeline than is now proposed.

That was before President Obama initially rejected the original Canada-to-Texas project pending changes in the route. Since then, TransCanada has completed a 485-mile segment of the original project — running from Cushing, Okla., to refineries in Texas — which did not require presidential approval because it did not cross an international border. Now named the “Gulf Coast Pipeline Project,” construction began in August 2012 and was completed this year. It went into operation on Jan. 22.

The current Keystone XL project includes 875 miles within the U.S. And, as noted, even TransCanada says it would create about 42,000 temporary jobs, not 120,000.

Environment

Critics of the pipeline are fond of saying it would carry “the dirtiest oil on the planet,” and there is no question that the oil is significantly “dirtier” than most in the sense that it results in more greenhouse gas emissions.

It comes from Alberta and parts of Saskatchewan, in what the industry calls “oil sands” and environmentalist critics call “tar sands.” By either name, they are vast deposits of bitumen — a form of petroleum so dense that at a temperature of 52 degrees Fahrenheit it is “hard as a hockey puck,” according to the Canadian Association of Petroleum Producers. It must be heated or diluted to be made to flow through pipes.

The bitumen is found mixed with sand and clay. Extracting it requires a good deal of energy — either through open-pit mining from surface deposits or by injecting steam into deeper, “in situ” (in place) sites. Refining it into useful fuels also requires more energy — and hence more emissions — than lighter forms of petroleum.

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How much “dirtier” is it? The nonpartisan Congressional Research Service surveyed published scientific literature on the subject, and those studies found variously that getting Canadian bitumen produced and processed into fuel produces between 70 percent and 110 percent more greenhouse gas emissions than the weighted average of transportation fuels now used in the U.S. That’s what’s called a “well-to-tank” figure, the measure preferred by critics.

However, once it is in the tank, gasoline or diesel fuel that comes from Canadian bitumen is no different than fuel from any other form of petroleum. And burning the fuel in car and truck engines produces a lot more emissions than producing it and getting it to the pump.

So over the entire “life cycle” of a fuel — from in the ground to out the tailpipe — burning a gallon of fuel from the Canadian oil results in 14 percent to 20 percent more greenhouse gas emissions, on average, than burning a gallon of currently available fuel, according to the CRS study. That’s called a “well to wheel” figure. The State Department’s final environmental report put the well-to-wheel figure at 17 percent — squarely in the middle of the published studies surveyed by CRS.

CRS estimated that oil flowing through the Keystone pipeline would result in an increase in U.S. emissions of greenhouse gases equivalent to adding somewhere between 770,800 and 4.3 million passenger vehicles. But whether that would mean any increase at all in global emissions “remains uncertain,” CRS said. And the State Department said “such a change is not likely to occur.”

State said Canadian oil will probably end up being produced and burned anyway, even if the Keystone is not built. It said new data and analysis indicate that “rail will likely be able to accommodate new production if new pipelines are delayed or not.”

Last year the Environmental Protection Agency officially questioned a similar conclusion contained in an earlier draft of the report, and said State should “provide a more careful review of the market analysis” that supported it. State did so, conducting economic modeling of 16 different sets of supply-demand assumptions and pipeline constraints, which it said showed that “cross-border pipeline constraints have a limited impact on crude flows and prices.”

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And meanwhile, more and more Canadian oil is already coming to the U.S. in tanker cars, just as State predicted.

Alternatives

• Railroad tank cars: A substantial amount of Canadian oil is already entering the U.S. by rail, in tank cars, and the amount carried this way is rising sharply. No White House approval is required.

Rail shipments have skyrocketed since the time the White House rejected the original Keystone route, when the shipments were less than 20,000 barrels per day. The State Department’s final environmental report estimated that 180,000 barrels per day were already being transported by rail from the Western Canadian Sedimentary Basin, amounting to nearly 22 percent of the volume that the Keystone could carry (830,000 barrels per day). And the industry is adding new rail capacity rapidly.

• Other pipelines: Besides the Keystone, three other pipeline projects are being proposed to carry Alberta crude oil to market. Two would carry it across the mountains of British Columbia to ports on Canada’s Pacific coast, to be loaded on tankers and shipped mostly to China and other Asian markets (and with some going to California), while a third would nearly double the effective capacity of an existing line to the U.S.

Safety

Pipelines can be hazardous. An average of 97,376 barrels (4.1 million gallons) of petroleum and other “hazardous liquids” have been spilled each year in pipeline incidents over the last decade, according to the Department of Transportation’s Pipeline & Hazardous Materials Safety Administration. These incidents have claimed an average of two lives per year, and resulted in more than $263 million in annual reported property damage as well.

Rail transport is even more hazardous than pipelines, however. Last July, 47 people died in a single disaster when an unattended train including 72 tanker cars loaded with crude oil rolled downhill, exploded and burned in the Canadian town of Lac-Mégantic in Quebec province. Forty buildings were demolished, and an estimated 5.6 million liters (1.5 million gallons) of crude oil spilled or burned.

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And that calamity is by no means an isolated incident.

On Oct. 19, four rail cars carrying crude oil and nine carrying liquified petroleum gas derailed in Alberta, causing a fire that burned for days and forcing evacuation of the nearby hamlet of Gainford.

Another crude-oil tanker train derailed on Nov. 8 and burned near Aliceville, Ala., releasing up to 750,000 gallons of oil.

And on Dec. 30, 20 cars in a mile-long train carrying crude oil ignited and burned after colliding with a derailed grain train near Casselton, N.D., sending up a giant fireball and spilling what federal investigators later estimated to be 476,000 gallons of oil.

The tempo of oil-train accidents has increased along with the sharp rise in tanker shipments, as has the amount of oil discharged. Soon after the Casselton spill, an investigative news report by the McClatchy news agency concluded, based on federal data, that last year more oil spilled in the U.S. from rail tank cars than in all the nearly 40 previous years on record combined.

Based on relative safety records to date, the State Department estimated that an average of six deaths per year would result if the Keystone isn’t built and the same amount of oil is shipped by rail instead. More than twice as much oil is likely to be spilled as well, State estimated.

Gas prices

Some proponents have claimed the Keystone project would hold down gasoline prices for U.S. motorists, while foes have claimed that it would do the opposite, at least for Midwestern motorists. We find that neither claim is valid.

The State Department’s analysis concluded that either way, the Keystone project would have “little impact on the prices that U.S. consumers pay for refined products such as gasoline.” That’s because Gulf Coast refineries that process heavy crude could continue to get it from Venezuela or the Middle East, as they do now, if they can’t get it from Canada, the report said. And even if the Keystone isn’t built, Canadian crude still “could reach U.S. and Canadian refineries by rail.”

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Other independent experts have said essentially the same thing. Curt Launer, a managing director at Deutsche Bank, has been quoted as saying, “Keystone wouldn’t have a significant impact either way on overall North American energy prices.” Another expert, Morningstar analyst David McColl, was quoted in the same article saying the Keystone would have “no material impact” on gasoline or diesel prices. And even TransCanada doesn’t include lower gasoline prices in its list of the “economic benefits” it claims would result from building the pipeline.

Critics have argued, on the other hand, that Midwestern prices would actually increase, but there’s little support for that idea.

The critics have pointed to an unusual market situation in which crude oil was selling in Oklahoma — as measured by the West Texas Intermediate benchmark price — at far below the world price as measured by the North Sea Brent benchmark. That was due in part to a pipeline bottleneck at Cushing, Okla., that allowed a glut of oil to build up from booming production in the Dakotas and Canada. In 2012, the price for WTI averaged $18 per barrel less than the average world price, according to the most recent report by the U.S. Energy Information Administration. But that “discount” fell below $4 per barrel in July 2013. It rebounded to $14 per barrel in January, and EIA projected that it would average $11 per barrel for all of 2014.

But even when the discount was greater, the lower price of crude oil in the Midwest never translated into consistently lower prices at the pump. A look at EIA’s weekly figures shows that since the start of 2011 the average price of regular gasoline in the Midwest has been only 4 cents a gallon less than the national average, and has ranged anywhere from 20 cents a gallon less to 21 cents a gallon higher. Those who assumed that refiners were passing on their lower costs to consumers were simply wrong.

The State Department analysis came to the same conclusion, finding no correlation between wholesale gasoline prices in the Midwest and the average WTI discount. (See section 1.4.6.1 in the “Market Analysis” section.) In a footnote (number 10), the analysis commented that the cheaper Midwestern crude oil “benefited … refiners,” not motorists.

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So, while building the pipeline would undoubtedly provide consumers with some measure of insurance against supply interruptions, as would any additional supply route, there’s simply no evidence that it would have any noticeable effect on prices at the pump, either up or down.

Alleged conflicts

Foes of the pipeline say the State Department report reflects a pro-industry bias because of an alleged conflict of interest by a firm hired to assist in its preparation. The Sierra Club and Friends of the Earth accused the consultant, Environmental Resources Management, of having ties to the oil industry and hiding a previous connection to TransCanada.

For example, “ERM and TransCanada have worked together at least since 2011 on another pipeline project in Alaska,” Friends of the Earth stated in a July 10, 2013, news release. But ERM said that was wrong. “ERM’s affiliates performed services on the Alaska Project only on behalf of a company other than TransCanada,” the company said in a July 17, 2013, letter to the State Department.

Indeed, the State Department’s Office of Inspector General investigated, and confirmed that work was done for URS Corp., which was hired by Exxon Mobil Corp. The Alaska project was a joint venture between TransCanada and ExxonMobil, but it was ExxonMobil that paid URS, which in turn paid ERM’s affiliates. The inspector general found this didn’t violate any conflict of interest rules, and cleared the department of any wrongdoing in a report released Feb. 26.

Another issue raised by critics is that ERM employees working on the Keystone evaluation had previously worked on projects for TransCanada, and one had formerly been a TransCanada employee. But the inspector general found that didn’t violate any conflict-of-interest rules. The inspector general said the department had substantially followed all regulations for vetting consultants for conflicts of interest, and at times had been even “more rigorous” than required. Overall, the inspector general found that “the Department’s conflict of interest review was effective and that the review’s conclusions were reasonable.”

The Sierra Club and other environmental groups vowed to fight on regardless of the OIG report. On March 3, several hundred people were arrested in student-led protests in Washington, D.C., where some secured themselves to the White House fence with plastic zip ties.